Tap to Pay (Not So Much in the U.S.)

CELLPHONE BANKING Priscah Aliaro, 24, counting money she has received through M-Pesa, a Kenyan cellphone-based money transfer service that is changing the face of banking in East Africa. Many Kenyans do not even have a traditional bank account.Credit Sven Torfinn for The New York Times

LONDON — Science fiction writers have long envisioned a cashless society. But some places have taken bigger steps in that direction than others.

The London transit agency, for instance, is trying out a new payment system that will allow passengers to tap a debit card on an electronic reader at a subway station and board the London Underground. In Sweden, consumers are increasingly using their phones for purchases at retailers or to buy a hamburger at McDonald’s and Burger King. And in Kenya, consumers are bypassing the traditional banking system and using a cellphone-based money transfer and microfinancing service instead.

Yet the United States, a far bigger economy than the others, has been much slower in adopting interconnected, speedy and secure solutions for making electronic payments.

In fact, it is the size of the American market that is a major reason for the delay. The costs of outfitting retailers with new equipment are much higher. And there have been disagreements among technology providers over what standard to use for mobile payments.

That is not to say that all American cities are behind their foreign counterparts. But the advances seem to be in pockets of the economy. Transit systems in Chicago, Boston and Washington, for example, have adopted proprietary payment cards that need only a tap, not a swipe. Some transit systems allow customers to buy their tickets online and download them to their smartphones.

Elsewhere around the world, the advances are more commonplace.

Shashi Verma, the director of customer experience for London’s transit agency, Transport for London, is part of a dry run in which so-called contactless payment cards — debit or credit cards equipped with a computer chip — are being tested to eventually replace the system’s Oyster smart card as the main way to enter and exit London’s transit.

Bank cards have been used successfully for pay-as-you-go rides on London buses for the last 15 months and will be accepted across the entire subway system this year.

Within two years, Mr. Verma said, the agency expected bank cards to replace the Oyster card as the primary method for monthly passes for the subway here. In the future, riders may be able to board the system just by tapping a mobile phone, he said.

It is the type of system the Metropolitan Transit Agency in New York City has envisioned as a way to replace its aging, magnetic-stripe Metrocards — and tested in pilot projects — but has never been able to adopt broadly.

“What we are doing today fits in London’s tradition of innovation,” Mr. Verma said, noting that the London Underground was the first system to use a magnetic strip for ticketing in 1961.

British consumers can also buy coffee and a muffin from a barista, pay a toll on the highway and, eventually, on London’s subway system with a tap of their bank cards as long as the purchase is under 20 pounds, or about $33. There is no need to swipe their cards or enter a four-digit personal identification number.

As in the United States, everything from local taxes to water bills can be automatically debited from bank accounts, without the need to write a paper check or worry about missing a bill in the mail.

Richard Koch, the head of policy at the UK Cards Association, a trade group, said that contactless cards started off slowly after their introduction in Britain in 2006 and were initially seen by card issuers as a way to differentiate their products. But their acceptance — by consumers and businesses — has increased rapidly in the last 18 months as more retailers accept the cards, he said.

“The proposition works best for consumers when it saves them time,” Mr. Koch said. “I find that contactless is really helpful when going in to buy a sandwich and drink at lunch time. It considerably cuts down my time in store and at the till.”

Despite a £20 limit, Mr. Koch said that average amount spent per transaction with contactless cards is about £6.50 (almost $11).

In parts of Hong Kong, the Octopus card, a contactless payment system for the transit system, is quickly becoming a catchall means of payment. Depending on the type of card issued, the Octopus can also be used to pay for parking, to buy lunch at a fast-food restaurant and to go to the cinema. Some cards also have the ability to keep two electronic wallets — one in Hong Kong dollars and another in renminbi for travel in mainland China.

In Sweden, consumers are taking a different approach.

Contactless payment cards are not in wide circulation. Instead, consumers are increasingly making electronic payments with their cellular phones as banks, mobile phone providers and start-ups are offering competing applications to serve as the public’s primary digital wallet.

WyWallet, which was started by the nation’s four largest mobile companies, has almost 1.2 million users, or about 20 percent of the six million mobile phones in use in Sweden, said Jakob Soderbaum, the WyWallet chief executive. That’s impressive considering Sweden as a whole has about 9.6 million residents.

“You use your phone everywhere,” Mr. Soderbaum said. “That’s the way to really change the habit and the way you’re making payments.” The culture and size of Sweden are driving factors in why consumers are rapidly moving to mobile payments, Mr. Soderbaum said.

Consumers in Sweden, particularly near Stockholm, are adept at technology and have been comfortable using cards, rather than cash, to make payments for many years, Mr. Soderbaum said.

Users can either enter their mobile number or scan their phone to make payments at retailers using WyWallet.

Sister companies to WyWallet are opening in Denmark and Norway, Mr. Soderbaum said.

Seamless, a competing Swedish company, is using its proprietary version of QR, short for “quick response,” codes to enable mobile payments.

The company’s mobile payment system, known as SEQR, was introduced in Sweden in 2012 and is used by more than 4,600 merchants there, including McDonald’s and Burger King.

The transactions are not executed through a credit or debit card network, so the cost is lower for retailers. Often the savings is passed back to consumers through digital coupons for discounted purchases or by depositing cash back into the account of a user who makes a certain amount of purchases, said Peter Fredell, the chief executive of Seamless.

The company also teams up with advertisers for offers, he said. “On average this year, we’ve given back about 100 kronor a week to people,” Mr. Fredell said. That translates to about $800 a year, he said.

The company recently announced plans to bring its technology to the United States and Britain.

In Africa, consumers are bypassing the traditional banking system altogether, instead focusing on technology to make payments. M-Pesa, the cellphone-based money transfer and microfinancing service. has become the go-to service for millions of Kenyans.

Anne Githinji, 27, a sales assistant at a fashion and clothing boutique in Nairobi, says she uses the M-Pesa service regularly. “I usually use it to purchase my phone airtime and to pay my electricity bills,” she said.

Ms. Githinji, who has been using the service since its inception in 2007, said she preferred M-Pesa to cash or other bank transactions owing to its convenience.

According to a study released in January by the Kenya Bankers Association, up to 60 percent of Kenyans use cellphones to carry out financial transactions, using it, for example, to pay for utility bills and school fees.

Only three out of every 10 Kenyans go to bank offices, while only 8 percent use automated teller machines, the report said.

The majority of M-Pesa customers have no bank accounts, but they withdraw cash and make payments or send money using their cellphones.

Safaricom, the country’s largest cellphone service provider, in partnership with Vodafone, a British telecommunications company, introduced the system in Kenya in March 2007, and it has expanded rapidly. Registered customers have a menu on their cellphone giving them the ability to move money to other phone-based accounts.

To withdraw actual currency, customers use a network of M-Pesa agents — 75,000 of them, scattered all over the country, compared with about 1,300 banks in Kenya as of 2013. Once an M-Pesa agent has verified a customer’s identity via the cellphone number, the cash is dispensed.

Gillian Ndeti, a senior business development officer for M-Pesa at Safaricom, said over 98 percent of all mobile money transactions in Kenya were conducted through M-Pesa.

Chad Bray reported from London and Reuben Kyama from Nairobi, Kenya.

Photo

SCATTERED Kenyans get cash through M-Pesa’s network of agents all over the country. One study says up to 60 percent of Kenyans use cellphones to pay for utility bills and school fees.Credit Sven Torfinn for The New York Times

A version of this article appears in print on 04/02/2014, on page F1 of the NewYork edition with the headline: Tap to Pay (Not So Much in the U.S.).